Income Tax (Earnings and Pensions) Act 2003 section 688B

Travel expenses of workers providing services through intermediaries: recovery of unpaid tax

Section 688B enables HMRC to recover unpaid tax from directors or officers of a company where the company has failed to correctly operate PAYE in relation to travel expenses of workers who provide their services through employment intermediaries.

• PAYE regulations may allow HMRC to recover unpaid amounts from a director or officer of a company (including a limited liability partnership) where the company has failed to account for tax properly under the rules restricting travel expense deductions for workers supplied through intermediaries.
• Recovery can arise where a company has had to account for tax because a worker provided fraudulent documents, or where the company failed to deduct and pay tax because it wrongly believed the intermediary travel rules did not apply — without holding adequate evidence to support that belief (a mere assertion by someone that the worker was not subject to supervision, direction or control is not sufficient evidence).
• Recovery also applies where the company should have deducted and paid tax because the worker's services were provided under arrangements involving intermediaries, and to any related interest or penalties the company owes.
• For these purposes, "company" includes a limited liability partnership, "director" has the same meaning as elsewhere in the Act, and "officer" covers any manager, secretary or similar officer of the company, or anyone acting or purporting to act in such a role.